Will Dogecoin trade within a range or can the bears force a breakdown?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• The sentiment remained bearish behind DOGE on higher timeframes.
• The defense of this zone in 2023 meant that a brief move beneath it could trap early short sellers.

In a 12 May report, the bearish bias of Dogecoin on the higher timeframes was highlighted. The on-chain metrics showed increased selling pressure in May and the possibility of DOGE being undervalued. This has not changed.

Read Dogecoin’s [DOGE] Price Prediction 2023-24

Bitcoin’s foray beneath the $26.2k mark showed that the bears remained strong and bounces were treated as temporary rather than a reversal in the trend. However, Dogecoin approached key support that was defended since late December. Can traders expect the range lows to hold?

Momentum and structure favor the bears as the buyers have little say in the market right now

Source: DOGE/USDT on TradingView

The tentative range formation (yellow) extended from $0.097 to $0.066, and the mid-range mark (orange dashed) has served as both support and resistance in 2023.

Since mid-April, DOGE was in a steady downtrend, following the failure to climb back above $0.09.

It broke beneath the mid-range mark at $0.082 on 21 April, thereby breaking the previously bullish market structure as well. The OBV has been in decline, and the RSI was unable to climb above neutral 50 since then.

Together they showed strong selling and a steady downtrend in progress. The next bearish target is the $0.066 support, but a move beneath it cannot be ruled out either.

A move to $0.06 before a reversal would indicate a liquidity hunt in case of a bounce back above $0.066.

Therefore, bearish breakout traders must be cautious of shorting DOGE in that area, while traders in a short position can look to book profits there.

Complete lack of bullish conviction from speculators

Source: Coinalyze

The 4-hour chart from Coinalyze showed that Open Interest was constantly falling over the past week. The price was trending downward as well at that time. This showed discouraged bulls and significant bearish sentiment.

Source: Coinglass

How much are 1, 10, or 100 DOGE worth today?

The liquidations charts also showed that May was dominated by long positions getting liquidated as prices continued to drop.

Therefore, cautious traders can wait for a reaction, or the lack of one, from the $0.06-$0.066 area before looking to enter swing trades.